The Quid Pro Quo – How Bad Patents Can Harm a Startup Company
WASHINGTON – May 31, 2016 - New inventors are often unaware of the quid pro quo that is fundamental to the patent system.
The inventors must show the world their innermost secrets of how to make or use their invention. In exchange, the government grants a limited right in the form of a patent.
One of the options for the inventor is to not to file a patent, but simply to keep their invention secret. The most common examples are the formula for Coca Cola or Colonel Sander’s secret herbs and spices. Both of these examples could have been patented, but were not. From a business standpoint, these were the right decisions.
There are many examples of patents that had virtually no value because the claims were undetectable, unenforceable, or ridiculously narrow. In the process of getting a worthless patent — a bad patent, the company gave up their complete roadmap for how to manufacture and use their product.
These bad patents are not just a waste of money, but their competitive advantage is eviscerated by disclosing everything they know. The bottom line: Some patent applications can be very damaging to a startup company.
Part of the analysis prior to filing a patent is to first estimate how broad or narrow the patent might be, then evaluate whether the patent – at that breadth – would be worth pursuing. This analysis starts with a patent search.
Many investors want to check the box of “is it patented?”. However, most investors are not aware that the patent will post all the company secrets online for all competitors – with virtually no benefit to the company. The decision to get a patent or not needs to be made carefully and thoughtfully, and many companies are better off with no patent protection.
Source: Krajec, Russ. “The Quid Pro Quo – How Bad Patents Can Harm a Startup Company” Investing In Patents (May 31, 2016).